Focusing on the provision of assisted reproductive services, as at 4 Feb 2024, Alpha IVF Group Bhd (ALPHA) has two specialist centres in Malaysia and one specialist centre in Singapore. ALPHA’s operations in Malaysia and Singapore serve their respective residents as well as foreigners from China, Singapore, Indonesia and other countries. ALPHA offers a range of assisted reproductive services to assist patients with infertility conditions to achieve clinical pregnancy. While its focus is in-vitro fertilisation (IVF) services, the Group also provides other assisted reproductive procedures including intracytoplasmic sperm injection (ICSI), intrauterine insemination (IUI), various diagnostics, testing and screening procedures as well as cryopreservation of eggs, sperm and embryos.Moving forward, ALPHA plans to expand its operational facilities and resources domestically, while also venturing into regional expansion efforts in Indonesia, Cambodia or Laos, as well as in China. We derive a fair value of RM0.38 based on a 26x PE multiple to its CY25F EPS of 1.5 sen. The IPO is expected to raise approximately RM116.6m from the issuance of 364.5m new shares. Besides utilising 14.7% of the proceeds as general working capital, 62.4% and 13.5% of the proceeds are allocated for geographical expansion as well as expansion and upgrade of existing medical centres, facilities and corporate office, respectively.

• Growth drivers. ALPHA’s growth will be driven by: i) establishment of threenew specialist centres in Malaysia, ii) upgrade of its existing laboratory andmedical facilities, iii) establishment of one specialist centre and four satelliteclinics in Indonesia, iv) establishment of a new specialist center in eitherCambodia or Laos, and v) establishment of two sales representative offices inChina.

• Competitive strengths. ALPHA’s competitive strengths include: i) establishedtrack record, ii) experienced team, iii) geographic diversity, iv) coordination ofmedical tourism facilitators, v) well-equipped specialist centres, and vi) activecollaboration and continuous research.

• Catalysts. Key drivers may include: i) declining fertility rate, ii) robust growthfor Malaysia's healthcare travel industry, iii) growing awareness of theavailable treatments of assisted reproductive services, and iv) governmentincentives to ease the costs of assisted reproductive services.

• Key risks. Key downside risks, among others, include: i) competitive industry,ii) potential changes in demographic trends, iii) potential decline in thehealthcare travel industry, iv) potential changes in healthcare regulations, andv) dependency on Zuellig Group,

Source: PublicInvest Research - 8 Mar 2024